Slovenia to pay €4m for cancelling mega defence deal
The government's decision to cancel a deal on the purchase of armoured personnel carriers closed by the previous government in its dying days will cost Slovenia a little more than €4 million, considerably less than the €70 million some initially thought the cancellation would cost.
The Robert Golob government decided last September to pull out of the €281 million agreement on the purchase of 45 Boxer armoured personnel carriers from the international OCCAR programme after an audit could neither confirm nor deny that the purchase is economical since the prices of comparable vehicles were not provided.
Still, the cabinet decided to terminate the agreement, arguing the deal did not include a special communications system worth €13.5 million, nor a potential annual indexation of the contractual value.
Defence Minister Marjan Šarec said on 8 June that the contractual fine would be much lower than initially expected because the new government acted quickly, so the producers could not demand a reimbursement of cost for something they did not produce yet.
He stressed, though, that this cost could have been avoided if the Janez Janša government had not gone through with the deal despite opposition from parties that won the 2022 election.
According to Šarec, the Defence Ministry last year paid €483,000 in administrative costs and €2.5 million in operative costs and covered its last liability, €375,000 in administrative costs this year, which brings the total figure at €4.15 million. The ministry thinks the development costs will not be charged since the vehicles have not been supplied.
Now all OCCAR members have to confirm the cancellation of the contract, which will "probably take the whole year," the minister explained.
The Boxers were supposed to form the backbone of a medium-sized battalion battlegroup and the Defence Ministry had been tasked to come up with an alternative solution after the deal was cancelled.
The plans made by the previous government on establishing the battalion battle group and reconnaissance battalion would cost up to €2 billion, but the current government decided to cut this cost slightly by establishing the mid-sized battalion group first and the reconnaissance battalion later.
It plans to save at least €400 million. "We'll know more when we complete the process of picking the eight-wheeled vehicles," Šarec said.
The agreement with the Organisation for Joint Armament Cooperation (OCCAR) was signed in the dying moments of Janša's government last spring despite calls by the election winners that such a decision should be left to the new government.